Contractor Licensing Basics in California
Obtaining a contractor license in the state of California is a central step to either being a licensed contractor or subcontractor. The state defines a "contractor" as a person, firm, partnership, corporation, association, or other conglomeration that undertakes any construction work as defined in California Business and Professions Code Section 7056. That definition of a contractor encapsulates all of the persons and businesses that provide contracting services, which can be broken down into various classifications of licenses.
California law has a general requirement that no contractor may engage in the business of contracting without being licensed by the State of California (California Bus. & Prof. Code Section 7108). Being licensed protects the public and consumers by ensuring that contractors pass an examination on the law , have a minimum amount of experience in their classification, and are of good reputation and character as evidenced by their credit history, and criminal background (if applicable).
It is important to understand that there are several classifications of a California contractor’s license. In short, they are:
Most people in the construction industry are familiar with the general work classifications and the broad definitions they represent. Many contractors also obtain additional specialty classifications or license to do specialty work. The following licenses represent specialty work in the construction industry:
Types of Contractor License Classifications
Contractors licensed by the State of California Contractors State License Board are, by statute, divided into 3 classes: "general engineering", "general building" and "specialty contractors." The California Code of Regulations (CCR), section 815, further subdivides the general engineering and general building classifications into subcategories of licenses which permit general engineering and general building contractors to perform additional specialized work in addition to work under their primary licenses. These subcategories of licenses are prefixed by "C" and are often referred to as "Class C" licenses. Thus, the terminology in the construction world is that there are 3 general classes of contractor license: "A" licenses for general engineering contractors and "B" licenses for general building contractors, but there are over 40 classifications of specialty licenses for "C" general engineering contractors and "C" general building contractors.
Class "A" licenses allow the licensee to construct or deal with engineering works that require specialized knowledge and skill. Earthmoving, pipeline, slope tunneling, grade forming, and paving work would fall within this classification.
Class "B" licenses are for contractors whose operations require the use of the principal contractors of several trades (including specialized building trades) and who, consequently, deal principally with the bigger inspectors and building departments. As a general building contractor, the licensee is engaged in a number of disciplines. This versatility as a general building contractor is generally called for when:
As the law indicates, a general engineering ("A") licensee is usually involved with projects which require a distinct, specialized engineering knowledge and skill; whereas a general building ("B") contractor contract is mainly for building construction as such. The licensee under a class "C" specialty license is restricted by law to doing the work or trades designated by the subcategory of the "C" license he possesses.
How to Acquire a Contractor License in California
A prospective contractor must possess a contractor license prior to contracting for work in California. The type of license required depends on the type of construction work. Individuals may qualify for a license as a sole proprietor, partnership, LLC or corporation.
To qualify for licensure as a contractor in California, an individual must be at least 18 years of age and possess four years of journey-level experience. This experience must be as a journey-level or higher for the license being obtained (i.e. for a general contractor’s license one must have four years of experience as a journeyman, foreman, supervising employee, or contractor as one of the four years of experience). Experience can be earned in California or in any State or country for skills that are the same as, or similar to, those of California journeymen. An individual can qualify for licensure as a contractor by the following:
◾ Working as a journey-level worker in the classification for which a license is being sought for at least two years immediately prior to filing the application.
◾ Showing and proving four years of experience as a journey-level worker in the classification for which a license is being sought for; or showing and proving only two years of such experience and at least two years of college surveying education, two years of technical education and training or the equivalent.
◾ Showing and proving four years of experience as a journeyman, foreman, supervising employee or contractor in the classification for which a license is being sought for for which a license is being sought for (i.e. a plumbing contractor must show and prove four years of such experience in the plumbing classification).
◾ Obtaining a qualifying partnership, limited liability company, joint venture, or corporate license.
An applicant seeking licensure as a contractor must also pass a written examination pursuant to Section 7065 of the Business and Professions Code. A passing grade is required in both sections of the examination. If an applicant is found to be unqualified after the first examination, they are eligible to reapply. However, if the applicant fails a second qualifying examination, they may not apply for a new examination for eighteen (18) months from the date the second examination was administered. The secondary disqualification period will begin when the second examination is taken. If an applicant was disqualified for failing to appear for an initial examination, they may take the examination again as soon as the required fee is paid.
To apply for licensure, an applicant must submit an application to the registrar and pay a nonrefundable application fee. The registrar will respond regarding the acceptance of the application within ninety (90) days.
Classifications under the Specialty Licenses Class
Class C licenses are further divided into 44 specialty licenses with narrowed scopes of work. These 44 specialty licenses are in addition to the standard contractor’s license classification – the C-9 "drywall license".
Classifications that fall under Class C specialty licensure include electrical, plumbing, roofing, solar, demolition, window cleaning, fencing, fire protection, flooring, framing, glazing, high voltage line work, masonry, window and door installations, elevator installation, finish carpentry, and numerous other specialties.
The full classifications can be found here.
How to Renew and Maintain Contractor Licenses
The terms of California contractors’ license expire in two years from their original issue date or the date of their most recent license renewal. As a condition of renewal, the licensee must submit a timely application for renewal and, if required, provide evidence of completion of continuing education, pay the required renewal fees, and update the classifications authorized on the license, if necessary.
Licenses will not be renewed unless the licensee (1) completed at least 32 hours of continuing education for a license that has been issued for less than four years, including at least four hours of business and law classes; (2) completed at least 16 hours of continuing education for a license that has been issued for at least four years but not more than 10 years; or (3) completed at least eight hours of continuing education for a license that has been issued for more than 10 years. The continuing education classes a licensee must complete depend on the specific license classification(s) held by the licensee. Such classes cover the following six categories of learning: Contract management; Estimating and bidding; Job site management and supervision; Labor laws and employment standards; Safety and risk management; and, Business operations.
Each application for license renewal must include payment of the required renewal fee. A license renewal application will not be processed until the renewal fee has been paid. The required renewal fee amount varies depending upon the license classification(s) held by the licensee. These renewal fees are, however, relatively modest. For example, the renewal fee for a license in the following classification(s) is $540: Class B general building contractor; Class C-10 electrical contractor; Class C-12 earthwork and paving contractor; Class C-17 (well-drilling contractor); and Class C-39 roofing contractor.
A licensee may also be required to update the classifications that are authorized on his or her license. A licensee is only authorized to engage in contracting activities falling within the scope of the classifications printed on the license issued to him or her. In California , the number of classifications available to licensees who want to engage in contracting activities is vast, currently approaching 45. The classifications fall into three categories: Building classifications; Specialty classifications that describe non-building work; and General engineering classification. The Construction Industry Classification System (CICS) is a standardized classification system used to identify those classifications.
Under the CICS, if a licensee is engaged in contracting activities that fall within the scope of nine well-defined building classifications, he or she must hold one of those classifications. The building classifications are: Class A, general engineering contractor; Class B, general building contractor; Class C, specialty contractor; Class C-8 concrete contractor; Class C-10 electrical contractor; Class C-13 swimming pool; Class C-15 flooring and carpeting contractor; Class C-16 fire alarm and burglar alarm contractor; and Class C-39 roofing contractor.
With respect to a number of the specialty classifications found under the CICS, unless a licensee holds one of these specialty classifications, he or she may not engage in the contracting activities that fall within the scope of that specialty. The specialty classifications under the CICS are as follows: Class C-1 (low voltage systems); Class C-2 (electrical sign); Class C-3 (bleachers, towers, and staging contractors); Class C-5 (signal and lighting systems); Class C-6 (air-conditioning and refrigeration); Class C-7 (building moving/demolition); Class C-9 (drywall lath and plaster); Class C-11 (cement concrete contractor); Class C-12 (earthwork and paving); Class C-13 (swimming pool and spa contractor); Class C-15 (flooring and carpeting); Class C-31 (construction zone traffic control); Class C-32 (parking and highway improvement); Class C-53 (sheet metal); Class C-60 (excavation); Class C-61 (sanitation and plumbing); Class C-62 (landscape contractor); and Class C-69 (refrigeration air conditioning and ventilation).
Common Issues with Contractor License Classifications
Unfortunately, many contractors are uncertain about what classification best fits their work, or fail to understand the limitations of their license. Additionally, many contractors are not aware of the applicable state and local licensing requirements. As a result, many contractors inadvertently violate licensing requirements, which can often lead to significant legal risks and economic exposure.
The following are some of the more common problems related to license classification and limitations, along with some of the potential solutions:
Contractors commonly fail to account for the breadth of their activities. For example, many believe they are able to engage in any type of general building contracting simply because they hold a B license. However, the key issue is whether any of the work performed is exempt work, i.e. it is work covered under another license class, which requires a different license.
A good example of that is a contractor that holds only a C10 license (electrical), who wants to bid on a contract for "low voltage, limited energy" work. The contractor may believe a C10 license is sufficient to bid on low voltage work. However, the C10 license does not authorize the contractor to perform "low voltage, limited energy" work because that type of work is specifically set forth in the Class C restricted regulations (See Title 16, California Code of Regulations, Division 8, Chapter 9, Article 2, Section 832.17).
Another common issue arises when a contractor fails to recognize that the work being performed is construction of a "public work," which requires the license contractor to meet additional requirements. For example, the contractor may fail to recognize the project is publicly funded or that prevailing wage and/or additional licensing requirements are triggered.
Why Proper Contractor License Classifications Matter
Long-term compliance with industry regulations can be one of the most strategic moves you and your business can make. When a contractor closes the deal with a project owner, it may feel like the end of a long sales cycle or proposal process. If you complete the project without complications that require you to go back to the bid process, then you can start to see the immediate benefits of having the proper license classification.
However, holding the correct type of license and completing the project according to the draw schedule can actually be beneficial for years to come. A few of the long-term benefits include:
Legal compliance. It’s simply unavoidable that the CSLB is going to use data from all license types to determine who deserves to retain their license. It may seem an inconvenience to have the California Licensing Board require extra documentation from you because of your C-21 or HAZ specialty license. However, this extra data could help you retain your license after building a strong background to your contributions to the industry.
Job opportunities. Your ability to consistently get contracts depends on many factors, including your prior experience, your ability to manage a schedule, and if you have the appropriate licensing. It’s just one form of validation for your client. But when your license matches your skill set and background, it can make you more competitive in the hiring process than someone with a C-36 who is offered the opportunity to do a C-61 job.
Client trust. Your clients have a need or a problem to solve, and when you have the right license type, they don’t question whether you will be able to get the job done. This can be particularly valuable when you find yourself in a higher demand field.
Conclusion and Additional Resources
In conclusion, contractor license classifications are crucial for ensuring that contractors in California work within their permitted scope of work. The classifications determine which types of jobs contractors are qualified to perform and protect both homeowners and contractors from potential legal issues and disputes. It is essential for contractors to choose the right classification and to follow the rules and regulations set by the Contractors State License Board (CSLB).
For further information on contractor license classifications in California, there are several helpful resources available to contractors, homeowners, and anyone else looking for clarification. The CSLB website provides detailed explanations of the various classifications and requirements for obtaining a contractor’s license in the state . The website also has a contractor license search tool, which can help verify the status of a contractor’s license.
Another useful resource is the California Business and Professions Code, Section 7050 et seq., which outlines the laws and regulations regarding contractor licenses in California. This code can be a valuable reference tool for understanding the requirements and restrictions associated with each classification.
Furthermore, there are numerous online articles, blogs, and forums dedicated to providing additional insight and information on contractor license classifications. By doing thorough research and staying up-to-date with the latest regulations, both contractors and homeowners can ensure that their work is compliant with California law and avoid costly mistakes.